Ask the Readers: Sell the Car or Keep It?

I love the sometimes-weekly Ask the Readers feature, even if I’m not great about sticking to my intended schedule. And usually I’m able to work with folks to condense their questions to a small space, which leaves me plenty of room to share my thoughts. This week, Martina sent me a lengthy e-mail that does a better job of laying out the pros and cons of her situation than I could. Read on to hear her dilemma.

I’m wondering if I should sell my 2007 Honda Fit. Or will this be a quick fix that may not pay off in the long run?

For the last several years, I’ve been trying to make it as a part-time adjunct community college instructor living in San Francisco. As everyone is likely aware, the state of California is experiencing a major budget crisis and education is suffering. As a result, I decided in 2007 to take a relatively low-paying but secure office job during the day and to continue teaching in the evenings at one of the two colleges at which I had been working. This has been a wonderful way to have some financial peace of mind, do the job I love, steady my budget, and get on with paying down $30,000 in consumer debt.

Last week, I was told by my college that, due to budget cuts, I won’t be offered classes for the summer or fall semesters. Beginning in June, this leaves me with just my trusty day job which covers only my rent, utilities, and groceries. Period. No saving, no paying down debt. Nothing beyond survival. And I’ve only got a $500 safety net in savings. If anything unexpected should happen, I’m deeper in the red.

At this moment, I can only see three ways to improve my financial situation:

Get a higher-paying job, or a new second job;

Get a cheaper apartment; or

Sell my car.

#1 is something that I’ll be working toward. Finding a better-paying job in this economy is a tough proposition at the moment, but not an impossibility. I would also like to go back to school one night a week in order to get an additional credential that will better position me for more solid, full-time teaching jobs (and, uh-oh, it’s going to cost me for that weekly class). This additional schooling will take 12 to 18 months.

#2 is non-negotiable. Although it costs 55% of the take-home salary from my day job, my apartment is my home, and I love it dearly. I’m in an super-walkable neighborhood that’s three blocks from my day job. Most everything a person could need is within a five-block radius, and I’m three blocks from a major streetcar line. It provides great quality of life. My place is right next to Golden Gate Park — lots of free fun and exercise!

#3 is very attractive to me at the moment. I bought this car in 2007 because the main college that I worked at is 30 miles from S.F. Now that I don’t see myself making this commute through the rest of 2010, I feel foolish paying for insurance (about $125/mo.), parking tickets (sometimes $0, sometimes $110/mo.), and for the car itself. (I should mention that a parent loaned me the money for the car, and I pay $200/mo. for that.) I could sell this car for about $10,000, which is almost exactly the total of my remaining credit card debt.

So, here’s my question: Is it better to keep a good, fairly new economy car in the long run as things could improve next year and I may want to be driving again and have this good car? Or should I sell it for what I see at the moment as having greater financial freedom? I live in a very pedestrian-friendly city, and I don’t plan on leaving San Francisco in the foreseeable future. Would selling this car be cutting off my nose to spite my face, or would it be a sound money move?

Thanks for your time and consideration. Any input is very, very appreciated.

To me, it almost sounds like Martina knows what she should do. Based on my own personal experience and preferences, and based on what she’s shared in her story, I’d sell the car, too. It sounds as if her apartment contributes greatly to her quality of life, so she’s probably best served my keeping it for now.

But I also think she should absolutely do what she can to boost her emergency savings as soon as possible. Maybe even take a weekend job working retail specifically to save for a rainy day.

If at some point in the future Martina decides she does need a car, it might make sense to pick up a beater as a stopgap. (Or join Zipcar.)

What do you folks think? Should Martina sell her car or keep it? What’s her best bet in this situation?

A car is definitely a money pit–since she’s living in one of the few cities in the US where owning one is not a requirement for employment, she should take advantage of that and sell it. It’s not big enough to sleep in if things get really tough, anyway.

Sell the car and put a couple thousand dollars from the sale into your emergency fund. Use the rest to pay down debt. The money saved on car expenses can be used to make monthly payments on the remaining debt.

It sounds like she may need to slow down or backtrack on paying off her debt. Sometimes you need to do this to enjoy the present. (And it doesn’t sound like things are enjoyable right now.) You don’t want to make things worse. A downward spiral is a terrible thing. My recommendation would be to use the tools and credit available to maintain her current standard of living. It’s not Martina’s fault that the economy is a little poor right now. Things will pickup and there is nothing wrong with borrowing a little against future income.

The hassles of moving or changing lifestyle, and lost value in selling her car, are efforts better spent investing in herself and career. If she needs a car a few years from now, she will have to spend a premium to get one. (I always see this blog as pretty anti-car, am I correct in this assumption?)

I recommend negotiating with your college to meet somewhere in the middle. Explain that if you cannot teach the classes, you need a supplementary bonus or raise to help mitigate the lost income. Meet your employer somewhere in the middle here. You can also offer to pick up extra projects, assist with student retention, etc. Perhaps your current employer can assist in picking up the tab for your additional credentials. Surely there is mutual benefit to both the college and you.

If she has a parking spot off the street I would consider just not driving the car. She could register it as not being driven and then cancel the car insurance. She would save on gas and car insurance and have the option of reinstating it when she needs it.

I would also consider getting another job to help build that emergency fund.

Sell the car. I have friends who live on the opposite side of the country in Boston and they do not own a car, relying on the T, buses, walking, etc., for getting around. If they do need to travel outside of the city, they get a Zipcar.

Normally I’d agree with everyone. But if she sells that car now it makes the job search (a professional search, mind you) much more tedious. If she wants to find better pay, she may find she needs the car to get beyond that perfect 5 block radius, or the reach of the streetcar. I’d say consider a roommate, move home to the generous parents, and take that class to boost her credentials. You’ll only lose money in selling that car. It’s one of the cheapest cars in the market to maintain and gets great gas mileage (something she may need very soon). Besides, she got the loan from her parents interest-free. Once she gets that perfect teaching job she can move nearer campus and go car-free.

Martina is not yet truly focused on her problem. Having *anything* that is “non-negotiable” such as a too-expensive apartment means she is ot yet truly ready to face reality–if there are other places to live that might be less burdensome. Of course, “$30,000 in consumer debt” doesn’t seem to have truly struck home either. If she can’t get a roommate, then becoming one somewhere to reduce her overhead would be very wise. Once the debt is paid and the financial situation less dire, there’ll be plenty of time for the “lifestyle” choices that would then be affordable. Obviously, the car should also go–it will only depreciate with time, and can easily be replaced should that become necessary. I would also consider another evening job to pay down debt faster, and embark on the additional class in another year when more of the debt is extinguished. There seems little assurance that teaching will be any more feasible even with the additional training, as the economy is not recovering all that quickly and California is going to take a very long time to recover. I do agree that some of the car money should go into an emergency fund, the rest to start a “debt snowball”. Finally, it is highly likely that if getting a roommate in the present apartment is not feasible that there is someone else in a similar situation in an equally advantageous location who is also considering taking on a roommate. That is definitely one thing I’d be checking out right away.

If she sells the car, the first thing she should do is pay off the loan the parent made her to acquire it. Any leftover money should be split between the emergency fund and the debt.

This person needs to understand that even with two jobs she was relying on credit to get by. She needs to find employment that will support her, get the room mate if the net rent covers a lot of the deficiency, or realize she cannot afford to live in San Francisco.

Good job on paying off $30K! Selling the car sounds a little short sighted though. It could limit the options of what other jobs or classes you can take; having had a job that needed it, I’d look for other jobs first before giving it up. I can imagine feeling trapped in the current job after it’s gone. Given how much it costs, I understand it looking like a good option though.

I had the non-negotiable awesome apartment, too, only in Brooklyn instead of SF. I moved there from a horrible place with bedbugs and a leaky roof, and it was my security blanket. But when I realized that this amazing apartment was preventing me fe saving money on my big NYC salary, I decided to move. I found a cute place with a nice roommate for $1000 less per month.

It was hard leaving the beautiful old place. I had great memories there and, truth be told, I liked being the girl with the awesome apartment. But I was sacrificing real security for the semblance of security. And as it turns out, I lost my job a few months later and the extra cash I’d been able to stash came in really handy. I’ve been able to use this time to contemplate what’s next for me. If I’d stayed in the old place, I wouldve had to get a new job immediately.

Lower monthly expenses = more freedom. Sell the car and find a place with a roommate in the same neighborhood.

Martina,
How much money do you owe on the car? Would $10,000 pay off your debt to your parents? Need to know how much net it would bring you. Would you have money left from the sale to apply to tuition for classes, or would the advantage be solely from not paying the additional costs of insurance, parking, tickets, maintenance, etc?

You might start by cutting out all that illegal parking :)

I would take a hard look at how useful the additional schooling is for earning potential and/or career advancement before putting yourself in more debt.

Housing is the biggest cost for you. Your location sounds ideal, so getting a roommate if applicable would save you a lot which you could put towards debt.

Absolutely sell the car. It sounds like you’ve already made the choices that go along with it (live near where you work, live in a community not a subdivision, etc). My wife and I got rid of our car ten teen years ago and I’ve never looked back. Every time we have had a major life change people have told us ” oh, you won’t be able to get by without a car.” This includes both of us switching jobs, moving, and having a baby. Car is a money sink. we use transit when we need, take cab guilt free, and use a local auto sharing service whenever we want. This gives us a net savings of about $2000 per year. If we need to save more, we drop the cabs. as a bonus not having a car is also about no maintenance, no parking, no regular fueling, and really living in your neighborhood and knowing your local vendors.

Don’t sell the car…yet. Selling the car is a short term, last resort solution. Like other commenters have said, it’s a really good car and you would loose money on it. It was rated a most reliable on consumer reports for goodness sake. You do have other options like…

Work for Kaplan. Teach SAT, ACT prep courses. If you are a good test taker you can even study and take one of their LSAT tests. Or MCAT or OAT or DAT if you are feeling adventurous. If you score high enough you can teach thier classes. And they pay decent money. You can even work your way up to be a teacher trainer. They are always looking for good teachers. Hours are normally at night and on weekends. AND you are still teaching!!!

I did this in college and it was great! Ask JD for my email and I can tell you more about the process if you have more questions.

I agree with Megan (#10). However, I wouldn’t get rid of the car just yet. Try cutting costs…first of all, IMO, you are paying WAY too much for auto insurance ($125/mo.) and WAY too much for parking tickets.

I know younger people have higher rates, but unless you’ve had some violation or an accident, I think that’s too high. I pay $97 for three (newer) cars!

Increase your deductible to at least $500 (better to make it $1000 since you don’t need to drive very often, and keep the insurance savings to ‘self-insure’) and make sure you are listed as driving for pleasure, with low mileage (under 5000 miles/year) on your policy. Get all the discounts you can (and there are many); get a professional or student discount; take a defensive driving class for a discount; join a credit union for a discount; sign-up for auto-pay for another discount, etc., etc.

Why so many parking tix? Maybe you could use public transportation as much as possible to save on gas and parking tickets; I wouldn’t sell the car just yet since you are at a bit of a crossroads.

I understand that it may be hard to give up a beautiful home, but 55% of take-home pay is crazy expensive. Get a roomie or start looking elsewhere. Also, cut costs everywhere you can…and make sure to learn about and take advantage of any benefits offered by your employer (tuition reimbursements, Health Flex Spending Accounts, cafeteria accounts, saving incentives, whatever)…

I’m of a mind to get a beater. Sell the Fit, and get something cheap. I drive a 2001 Metro. I paid $4200 cash for it in 2004. It’s cost me about $2000 in repairs over its life (valves, timing chain, alternator). It gets 40 mpg. Every part is cheap, and it’s easy to work on too.

I understand that a car is a statement for a lot of people. I want a hotter car some day too. Right now, though, a car is transportation. It’s paid for, it runs great, it’s cheap. Those things help me swallow my pride (and even contribute to a perverse “look how frugal I am” kind of pride) and just enjoy having a car that’s not a big monetary sinkhole.

Besides, if you move to Texas, you’ll need a car. (I’m just saying; Texas has money for public education. Cali doesn’t).

If you sell the car, would getting a bike (second-hand) extend your working range for new jobs? Or do you already have one even? You can commute a decent distance on a bike, and it’s often as fast as driving in urban areas as you can cycle at the same speed as the snarled up traffic.

Keep in mind that car costs will be replaced by public transit costs, and that your family who loaned you the money is probably going to get kinda upset. I mean, they loaned you the money for the car, not for you to pay off debt, so if you sell the car, and still owe them money on it, you might need to pay them back first.

I agree about biking. Also, this conversation should have more emphasis on public transportation (and zipcars are also a great option). There is no reason she shouldn’t be able to sell her car and get around fine — even to a new job/job interviews. I personally have been carless (to save $) for 9 months now in a not-very-carless-friendly city (Rochester NY) and have been fine.

The deciding factor is the $125/mo in insurance and parking tickets (I face the exact same scenario, plus $100/mo for parking).

$125/mo + average $55/mo is $2100/year. How much will you be losing by selling the car? (What would you pay for a new one compared to what you’d sell it for?) My guess is you could buy a 3-year old Honda Fit couple years for the same $10k you’d sell yours for now, and have saved $4200 in insurance and tickets in the meantime.

I’d sell the car, pay back the parent, put $2k in emergency savings, pay off as much debt as possible, and then find a way to still make SOME payments to debt and not live in the red. That might mean taking on even a one-night-a-week type gig, tutoring, working retail, waiting tables, whatever.

Having a car in a big city like NYC or SF is a luxury. Get rid of it! Besides, there’s no guarantee you’d even need it for your next job.

Good luck!

PS. I have sold a car twice to finance a move and both times I was left wondering where the money went (security deposits, Uhauls, CC debt). Be intentional about what you do with the money and remember to prepare for the possibility of having to buy a car again.

I agree with getting another part-time job, finding a room-mate and selling the car. ALL of them. And I’m not sure how much I would attack that debt just yet, although it’s part of the debt snowball plan of attack. I’m reading everywhere that six months’ of monthly expenditures is the norm in case you lose your job, and I’m putting off a little debt payment until later in 2010 in order to save more. The economy is so sluggish. I think the car must go, if she does nothing else. Good luck!

Where do you live? $125/mo is the best rate I can get and I have a clean record. And parking tickets are a fact of life here in Chicago, no matter how careful you are. At least for my job they are. NYC was the same way when I lived there and I’m guessing SF is not much different.

My son lives in SF and has kept me up to date on the crazy costs of living there. I believe it has even surpassed NYC for the most expensive city in the country. Having just visited him I can appreciate how hard it is to find legal parking. Wow!!

All that said, if you truly intend to live within your means and lower your debt I would strongly recommend four immediate courses of action:
1. Sell the car – NOW! My son has lived in SF for 4 years without a car and has absolutely no problems with public transportation. If he really needs a car he just does zipcar. This is a guy that loves cars too. But he was smart, he did his research before moving there and sold his car before moving. He couldn’t imagine dealing with the parking costs, outrageous insurance (yes $125/mo is very realistic for SF) and all the other hassles of having a car in SF.

If you really need a car in the future you can easily replace it – by the way – next time DO NOT BUY NEW. Let someone else eat that depreciation.

For those who don’t live in SF and are counseling to keep the car – you cannot begin to imagine how much it costs to own, maintain and park a car in SF. I was shocked when my son went over the numbers with me. I was actually against the idea until I saw his research. Dump the car NOW!!!

2. Your non-negotiable apartment – yep – it’s got to go. That is just not realistic in that city. Housing is far too expensive for someone in your financial situation to be living alone. My son used Craigslist and has found two wonderful apartments with great roommates both times.

In his old apartment and his current one he has lived in a really cool places at 1/2 the cost! Be smart and take your time, interview your potential roommate carefully. In my son’s most recent move he did a very smart thing, he narrowed down the choices and then took his number one roommate choice out for lunch. They got to chat over a meal in an informal setting and he could tell they would definitely click in the day to day world of sharing an apartment. Can you tell Dad is proud of his smart son – lol!

3. Get the second job – pay off that debt! Take ALL of your take home pay from the second job and put it entirely against your debt.

4. I’m assuming you’ve completely stopped adding to your debt. If not you MUST do this immediately!!

I bet you knew the first three already have to happen (you’re just denying #2 for now) but the first key is really #4. You can keep trying to dig out of the debt but if you don’t stop adding to it you’ll never truly succeed.

Key information missing: How much is owed on the car? Will it be sold at a loss? A “loan” is mentioned almost as an afterthought. Is she treating the loan as more of a gift/subsidy that she might get around to paying sometime?

Typically when you sell a car you have to pay off the (conventional) loan, and the payoff amount is a huge consideration. In some ways it is very good to have the option of selling and not being required to pay a secured loan right then. However, I’d be concerned about the idea that this implies continuing to carry a loan on a non-existent car.

I don’t know how anyone can assume she will be able to pay off the car AND have several thousand dollars for savings and credit card debt. I doubt it- unless the parent forgives part of the loan. It MIGHT make sense to pay off the credit cards, and basically convert the purpose of the parent loan, depending on the terms. But my first inclination is to pay off the loan for the item when it’s disposed of and reduce the monthly expenses by the $200.

Sell the car! My last debt was a 2007 Honda Fit as well. We sold it last summer and I haven’t regretted it one moment. I now drive a paid for CRV and it gets way better gas mileage than the Fit, which was dragging a car payment book behind it ;)

I had been in the car payment cycle since I was 19 (I’m 37) I’m glad to be free now. Just be sure to put a little aside each month to cover repairs.

I agree totally with #13 med student. I would also add that In 2004 when the economy was pretty good, I had a car in great condition that I couldn’t even get one offer on. Sometimes selling a car is not as easy as it seems and you will have to make due with your bills in the mean time.

I was also a bit confused as to how much you owe your parents and how selling the car could pay off your credit card debt if you are paying $200./month for the car loan. I have a feeling it isn’t going to work out in the end to sell the car just yet. If it comes down to it, the FIT is pretty roomy, so you could live in it! :)

Sell your car. Use the money to 1) pay the car loan money back to your parents, 2) establish some emergency savings 3) invest in your future by signing up for that course, and if there’s anything left 4) pay down some of that credit card debt.

You’ll now have an extra $325 a month to put towards your debt, which should diminish it pretty quickly.

I would think about using the extra time you’ve gained (through your job-loss) to pick up something else part-time to help pay down more debt.

I would not get a cheaper apartment. It only happens to cost you 55% of your take-home because your take-home just happens to be very, very low right at the moment. Once you get another part-time job, or get more money for this job, or get your teaching job back, that ratio will improve quite a lot without you having to give up a place that makes you happy, is convenient for your job, enables you to walk everywhere, and is convenient for your extracurricular activities.

It is not always about cold calculations. This apartment obviously positively impacts your life, increasing your mental and physical well-being. I wouldn’t put a price on that.

I’d also sell the car: In SF you’ve got the ZipCar option should you need a car for a period of time on a particular day. You’re walkable as well. I’m in San Jose and have been sharing one car with my husband for nearly two years now. (Had a car stolen and just never replaced it.) SF is easier than San Jose to get around without a car.

I have 5 friends who live in the SF bay area, all young professionals in mid twenties. None of them own cars. it doesn’t seem to be necessary there at all. I think the folks who are nervous about selling it have never lived in a place like that. Unfortunately, there are too few such places in the USA.

J.D., you’re a professed fan of Elizabeth Warren’s balanced money formula, so I’m surprised by your answer! Ms. Warren would point out that having 100% of Martina’s income going to needs is WAY out of balance. Needs should ideally be under 50% to make it easier to weather a job loss and to leave room for savings and even wants. Just selling the car isn’t going to accomplish that.

Here’s the thing: Martina says she loves her *apartment*, but then she lists three or four things that she loves about her *neighborhood*. Leaving her apartment doesn’t necessarily mean leaving her neighborhood. There must be a cheaper studio apartment or a roommate situation nearby that she could move to.

I think the answer here is that she should try to get a better-paying job, move to cheaper housing in the neighborhood, *and* sell the car. If it turns out all that was overkill and she has more money than she knows what to do with, I doubt she’ll have regrets.

It wouldn’t hurt to look around for a cheaper apartment with similar advantages. It’s even possible there are options in her current neighborhood. If the apartment, or its advantages are that important, then certainly make keeping it the highest priority. You can get another car, you can’t always find another great apartment.

I think I would be inclined to sell it, put some of what you get into an emergency fund, and the remainder towards your interest bearing debt. Though it may be polite to ask your generous parents if they mind you putting that money towards other debts, or would rather you pay them back since their reason for lending may have been just to get you into a vehicle.

You know she’s not really asking for advice on how to live and what to spend the money on. She’s asking should she sell a car. It’s her choice whether to move or not. Yes, a roommate is a good idea, if it’s possible, but to say that she shouldn’t keep the apartment or that she must find a roommate is looking at her situation under the lense of pure fiscal number crunching. Life is not about money.

Martina, you should sell the car. Paying off your (I’m assumeing here) credit card debt is a good use of what is leftover from the sale. I would also consider using some as an emergency fund. No debt is great unless you make the last payment and break your leg the next day. I’d explore several options for increasing your income and reducing your expenses.
I have to add this disclaimer: I’m not in your situation or in a part of the country with good public transportation. Also, I really enjoy having a car as I feel I have more freedom. I would have a very hard time trying to sell my car if I was in your situation. Still as painfull as it might be, sell the car. It’s easy to get another one later. Good luck!

I’m not sure what subject you teach, but I have a lot of friends that teach classes online from collegees outside of their state. It might be something to consider for some extra money (and keep up on your teaching skills).

1. sell the car. its not about how much you will be getting for it, but about how much the additional cost of keeping it will affect you in your current situation. plus once things go back to normal, if you choose, buy another one.

2. look for a new apartment, and if you can not find one that you like for a lower price, then keep your existing place.

3. look for a new job. like mentioned earlier, anything that will bring you extra income its ok.

4. dont add any more debt, and dont worry to much about trying to pay it off faster. At least not right now. you can get back to this task once you feel more financially secure.

Selling the car would probably get rid of car payments and car insurance and eventually paying for new tags. I think this is a great way to go. She may want to consider applying to teach courses for colleges online in other states.

I’m so sorry to hear about Martina’s situation. I think I’d try to get a distance learning gig like everyone else is saying too. I would look in a state with a smaller government. You may find a job in a Texas or South Dakota school where politicians aren’t doing as much to ruin your prospects. Especially promising now, I would think, would be schools that cater to vets due to a new GI Bill that is a bigger better deal.

I would keep the car if mass transit wasn’t going to work, and dump it if possible. I don’t want any self-inflicted crisis, and want to whoop up on the other crisis as soon as possible.

Yeah, sell the car. From what it sounds like, you’ll save somewhere around $300-400 a month. That’s a pretty hefty chunk of money. Especially if your current job is so close and the transit is so close. It would be slightly silly to try and move as there is a good chance that she might end up moving farther from her job and actually need a car then.

1.Find a roomate if you can or look for another cheaper apartment in the same neighborhood. Even if you are a couple blocks further away, lessening the financial burden would be worth it (even $50 helps). 55% of your money is way too much to pay when you can find other options.

2.STOP getting parking tickets.

3.If you are hesitant about selling the car #5’s suggesting sounds like a good way to buy you some time.

4. Look for second job closer to home. Work for another college (30miles away doesn’t seem worth it anymore when your classes are getting cut-but your call), become a private tutor, substitute at a high school.

Sell the car! I live in Chicago and share 1.5 cars with my husband (our 20-year-old Miata counts for only half a car – it’s garaged all winter long). I have never driven a car to work in 20 years of adult life in the Snow Belt, and I’ve done just fine and saved loads of money. Public transit is way cheaper than car ownership.

In San Francisco, she may not be able to find another apartment that costs much lower within a very large radius. She may get lucky; if so, she’s just as likely to get lucky downtown as anywhere else. Start looking for a new apartment at a lower rate in your neighborhood, even if it means dwelling in a slightly less nice building.

Why is everyone losing their minds at the idea of not having a car? Has anyone ever been to SF? It is perfectly possibly to live car-free in many areas of the country.

#4, no, this blog isn’t anti-car, in fact it’s pretty pro-car. It’s all about how to get more value out of your car. There’s virtually no discussion of not having one. In many ways this blog is for suburbanites.

I would sell the car. I just sold my own car last month, after owning it only one year. I knew I needed to do it, too, a couple of months before I could bring myself to do it. But now it’s done and it’s totally worth it. I told myself that if it didn’t work out, I was free to buy another one–but things are working out. It’s hard to take that first step to sell it, but it gets easier.

I also second the suggestions of finding a roommate and taking on another part time job.

Definantly sell the car. The best part about a depricating asset is that you sell it and later can buy it back for less money, so if she does need a car latter she could purchase the same car again and have made some cash off the transaction (purchase price difference, interest on emergency fund increase from car sale) and saved additional cash (from insurance and interest on loans).

DO NOT SELL the car. I was just in a position looking for a better paying job. I needed that car SO badly to go to interview — to network — etc. etc. I doubled my salary. But I can tell you that wouldn’t have happened without the car — I had to drive on a moments notice out of state (over the boarder – not as far as it sounds) for a final interview. KEEP THE CAR — get a roomate or move somewhere you can. GOOD LUCK!!!!!!!!!!!!

I vote for selling the car. If you truly need a car, later on, use Consumer Reports to find a good used car, cheaper. Or a scooter.

And I agree that you might at least try to see if there is cheaper housing in your neighborhood, or a possible roommate you can live with. Tell yourself that you’ll just look, that you absolutely won’t move or accept a roommate unless you find a solution that you can love. It’s amazing how allowing yourself to “just look” can get you over the hump.

If you can fairly easily walk or take public transportation to most of your destinations, then selling the car is definitely the thing to do. It is good for you, good for your pocket book, and good for the environment. If you need to travel further, you can always rent a car.

Most people cannot fathom the idea of life without a car, but it is incredibly doable in the right areas. My daughter is a recent college graduate and either walks or takes public transportation. SHe has been doing this for years. She loves it, and actually feels she has more freedom than she would with a car. She cannot imagine life WITH a car payment, insurance, repairs, etc.

This is just one of those times were we need to take a hard look at why we think we need something and change our mindset. Obviously, being “car-less” will not work for most due to distances in the more rural locations and lack of public transportation, but where possible, I say why not?

Perhaps it would be best to look for the second job before selling the car…what if the new job requires a car? Or at least the job hunt. I can’t imagine not having a car, but where I live in South Dakota there is no public transit (they don’t even bus the kids to school, except the country kids, parents have to drive them if they’re not in walking distance.) Car insurance must be cheaper here too, since I’m paying about $80 a month for 3 vehicles.
If she finds a new job that she can get to without a car, then selling the car would be a fantastic idea.

I second the roommate idea, especially since your housing costs are 55% of your income. No wonder you’re strapped!

Selling the car doesn’t seem like a bad idea, but, as Nate says, it would limit your options for your job search. You have to ask yourself whether or not you need those option open, or if you’ll limit your prospects to mass-transit-commutable jobs. If you’re going to limit your options then I think selling the car is a fine idea.

1 – Sell the Car
2 – Put all of it in Emergency fund
3 – When you find your new secure job then, use some to pay down debt.

If you dont wait till you find a job first, and you pay debt, it could hurt. Atleast this route if you have the money stockpiled and find a job, you can throw it at the debt later. The other option – you cant get your money back if you need it!

Having a debt of 30K, with 55% of your net salary going towards your rent is not a ideal situation. You need to plan better. In fact, even if you are not in debt, paying that much crazy amount to rent is not advisable. Get out of the place, it is just too expensive at this time. Since the car is a loan money from your parents, it is a better financial and practical move to keep it. Find a cheaper place or find a room mate ASAP. A simple health issue will just bankrupt you in the situation you are in. You need to increase the emergency savings plan. Keep us posted what you have done. Make Get Rich Slowly readers proud. You can do it. We are all there to support you over the wide internet.

Truly, all the readers are fine people. I know I can ask for similar advice from all of you here.

Sell the car. If you needed it to get to work, I’d say keep it, but you say your office job is pretty secure, and you can walk to work now, so I don’t see why you need the vehicle. In my city I walk to work and do just fine without a vehicle. If you really need a car for something, you can take a cab or have your parents or a friend drive you.

I’d say a car is a luxury you can’t afford to have right now.

As far as the rent goes – 55% of your income sounds like a lot, but maybe you live in an expensive city or the office job doesn’t pay well? I agree with the house is home thing, but I think you should also get a second job as well as selling the car if you want to stay in your current home.

I would leave SF. It’s the most expensive place to live west of Chicago. Come to Portland, the Bay Area of the north, with half the COL. ;)

Kidding. Just sell the car. You’ve already lost the money on it so don’t let the sunk cost hold you back. In SF cars are expensive and almost pointless. Zipcar is available and transit will get you everywhere. And if you double your income down the line & decide you need a car, buy used. By then you can get your Fit back at a much better price. ;)
(And it wouldn’t hurt to at least LOOK for a cheaper apartment…)

If SF is like Boston in terms of public transit, sell it. Use zipcar. Don’t get a new car until you can afford to pay for it in cash or you need it for a specific job. We couldn’t afford to pay for insurance when we were in Boston– but the car was a luxury, not a necessity by any means. We did eventually get a car (I get wanderlust sometimes), but only after we could afford it. One of my friends in Boston (9 years so far) had such a good experience with zipcar and public transit that she hasn’t gotten a car yet, despite making tons of money (at least compared to her graduate stipend). She’s saving for a down-payment on a house or condo instead.

Zipcar is also awesome in that it has a dedicated parking place when you return it. That means a lot in the city.

If you were in a city with worse public transit and without zipcar options, I wouldn’t necessarily recommend selling the car, but if you don’t really need one, go without until you can truly afford it. SF also tends towards good walking weather, especially if you carry an umbrella. If you’re thinking of doing your job search further afield, it might be worthwhile just moving closer to your work rather than commuting, even if you have to live in Oakland.

If you haven’t tried it and you’re a good tenant, ask your landlord if you can negotiate the rent down. We effectively blocked any rent increases on our Cambridge apartment just by asking. If you’re going to have to move anyway, it’s worth a try.

See if you can get a job teaching online classes. I put my resume out there and got two interviews inside of a month. The training can take a bit if you haven’t taught online before, but it pays decently and you can do it from home in your pajamas.

Sell the car and sign up for zipcar, I know several people in the city who do that. Or Buy a bicycle — If you live at roughly 9th/Judah (which it sounds like you do), and you don’t leave the city that often, you could get by just fine like that. I used to live at 20th/California and commuted by bike to 3rd/Market for work, it was faster than taking Muni. I even took an evening class at CCSF and would ride from work to school, and then school back home.

You don’t need to own a car to go to job interviews like someone suggested. Rent one or use zipcar or take a taxi. Although, if you’re looking for jobs outside the city, and you find something, you’re probably going to want to buy a car again as soon as you start commuting every day. If that happens, you’ll wish you had just kept your car. Depends on where you’re looking for jobs, though.

I too live in an apartment that zaps more of my income than it should, but it’s 2 blocks from my office, close to just about everything from the theatre to groceries and is in a prime spot for catching the bus. One of the first things I did when I moved downtown was to sell my car. I could not rationalize paying the money for downtown parking, gas, insurance and maintenance for a car that is only ever used once or twice a month.

You know what you should do – sell the car. Peace of mind is worth more than four wheels at this time. If you want, you can give yourself a time line – take a month or so to look for another FT or a new PT job, but if you don’t have anything when the time is up, sell.

1. What is your car loan financed at (or is it paid off)?
2. How much do you owe on the car?
3. What is your credit card interest rate?
4. Do you have the ability to house a roomate?

If you’re paying 6% or better on your car loan, I’d first look to refinance the car (You can get rates as low at 3.5% right now), and put the savings each month into your emergency fund. If the car is paid off, why in the hell are you paying $125 a month for insurance? You clearly have collision or comprehensive coverage on the car when you should be paying for liability only. That would save you around $75 to $90 a month I would guess.

If you can get $10,000 on the car and you don’t see any use for it over the next 18 months, then you should sell it and put the whole thing in a high interest savings account or a CD and try to earn some interest on it. By selling it, you’re already saving yourself around $325 a month (from the sound of things), which should help you meet your obligations. Considering the state of the economy, it would be better to keep the money earned from the sale (which you’ll have to pay taxes on)

If your credit card interest rate is 15% or better, go to the Vault and SlickDeals.com and look for a card with a lower rate, preferably one that offers 12 months interest free on balance transfers. Then just pay the minimum payment on the credit card as it will go straight to the principle instead of paying for interest. Even paying $200 up front to transfer the balance puts you $1000 ahead with a $100 payment per month for the next year.

You need a roommate if you can house one (i.e. not a studio apartment), even if it’s only for the next year. If you can secure one, look for a part time job on the weekends or evenings in your walkable neighborhood (waitressing, bartending) to make up for your lost income from teaching, or look to find online courses that you can teach from home. Kaplan and University of Phoenix have a lot of these jobs available.

Other things you could do for some extra cash:

1. Rip all your CD’s to digital format and then sell the CD’s to a local reseller, post them on eBay or Amazon, or sell the collection on Craigslist. Depending on the size of your collection that’s around $100 to $1000 of instant income, and it opens up a lot of space around the house for a potential roommate.
2. Offer to tutor students a local middle school or high school for a fee. You live in an area where people have a lot of disposable income, so you could charge $30-$50 per session and do 5-6 sessions a week. That’s pretty damn good money right there, and you could do them at the school without having and expense for office space.

I disagree with people who say you shouldn’t have non-negotiable items because of your situation. Why move halfway across town to a shittier apartment when you now have to have the car to drive to work? What the hell is the point of that? You like where you live, so make other sacrifices and pick up a part time job to stay there.

Bottom line: You have options. You just need to weigh them and find out what fits you best. The only suggestion I would make is that you get at least 4 months of expenses into an emergency fund that earns interest as soon as possible. This will prevent you from being in this situation again in the future.

Ask your parents.
If they gave you the loan- they may be willing to “store” and pay for your car while you are in this situation. Selling a car in this economy is not easy. If they don’t “want” it maybe they could sell it for more where they live. I would do it for my adult children. My brother has spent the last eight months trying to sell a mini… We employed “old people” can see you all suffering and trying to make it. We want you to be successful.
Teach on line. One of the cool things to do is teach English on line-webcam- to Chinese students. You could take your computer outside, enjoy the day and still teach!Google it.
Don’t go back to school. Every 20-35 yr old I know is in school in one way or another if they are underemployed. This generation is going to overcredentialed. Practical experience means more.
Don’t move unless you found something you really love. Yes, expenses are high- but you live in the city and so your pleasure expenses are low. A great apartment in SF is worth the wait for a better job.
Getting a roommate is much easier for a guy- IMHE.
Don’t move to Portland. My nephew now works at a grocery with a Masters in English- along with his girlfriend with a Masters in Women’s Studies. Unemployment is everywhere. They both are in school as well- what a waste of $$$.

Without having read all the responses above, here are my thoughts:
1) Determine if selling the car will payoff the car loan from your parents AND your consumer debt.
2) Decide if you put some of the car proceeds into another used car (cheap, but reliable (I recommend a Subaru)). Do you need the car? Can you mooch rides when you need them?
3) Pay off as much consumer debt as is reasonable leaving a cushion for an emergency fund.
4) Find another part-time job – Tutoring?? (that can be tax-free under the table.)
5) Put the average of the parking ticket costs into a specific fund for something for yourself. A newer car or new furniture or a new computer… Sounds like you deserve something for you!

I would also suggest getting a part-time evening job since she’s not teaching this semester and is used to working evenings on top of her full-time day job. Perhaps a job at the grocery store she frequents so she can get a discout which will help with expenses.

You know, the 55% figure for the apartment is *really* hard to judge. I know in NYC, that >50% is not that unusual. http://weiner.house.gov/reports/Rent4.29.08.pdf I’ve also heard that SF has an even higher COL than NYC. Without knowing Martina’s current rent, it’s not even clear whether she has an opportunity to significantly reduce that percentage without sacrificing personal safety. It seems like many people are assuming that $1000 or $800 a month will be a drop in rent for Martina, or that she has some large expansive space. She may very well already be in a tiny studio apartment, paying a relatively low rent for the SF market.

I think the best bet is to sell the car now. It is a depreciating asset and the resell value will continue to decline. She is in a situation that she is walking distance to almost everything she needs. Maybe hook up with an E-Car or Virtual Car association for those infrequent uses of a car. A second job sounds like a necessity to keep her cash flow from crashing. And it may only be a temporary measure as she keeps looking for a better paying full time job.

I don’t think the car is the biggest question here. (Though, having lived in the Bay Area for 10 years, I agree with those who say sell it and use Zipcar.)

I think the biggest question is: You are living in one of the most expensive areas of the country. What are you doing to immediately boost your bottom line?

“Low-paying and secure” is great when you live in a low cost-of-living area. In San Francisco, it’s suicide. “Retail” is the same way.

You are obviously articulate, can write well, and know how to teach. I’d suggest creating courses on a problem people have that they’re willing to pay to solve, and selling them online. I know plenty of teachers who have made the leap and are no making well into 6 figures doing their teaching online…and having a blast! (Shoot me an email for specifics.)

But seriously, you have one dead end job, another that will never get you the pay required to do anything but rent a tiny room in SF, and you’re in major debt. Time to make a MUCH bigger change than whether you drive a car or not.

Great post – I would definitely sell the car. I didn’t have a car for many years in upstate NY and in Minnesota, and did just fine – you have to be creative and plan ahead of time to get places, but that’s ok. I rented cars when I wanted to go and visit friends and relatives out of town or had a meeting/job interview. I took the bus or biked to work and to the grocery store. The freedom of a bigger bank account outweighed any “pain” associated with not having a car by a long shot! And I found I sort of enjoyed giving people a shock when they found out I didn’t have a car – always led to interesting conversations :-)

I haven’t read all the comments yet, but I’ve been to San Francisco many times, and I can assure you that parking tickets are a fact of life. Also, having a really good apartment that you love is something rare; it’s worth fighting for, and I would NOT advise giving that up, especially given that it is in a safe area near the tram.

My advice to Martina would be to ask the generous parents if they will garage the car for her for a while. She can submit a statement to the DMV and the insurance company that the vehicle isn’t in operation, and save those costs right off the bat. No more insurance, no more gas, no more parking tickets – but she still has the car if she needs it for a new job. Apologies if someone else already suggested this and I skipped over. :-)

In the meantime, use SF’s good public transportation, Zipcar, or the occasional rental to take care of job interviews or other necessary car trips.

Clearly Martina’s work ethic isn’t a problem and she’s already focused on improving her finances. I agree with those above who recommend working hard/saving for another year, then undertaking the coursework to transition to more secure and/or highly paid employment.

Off topic, but can you show me any of the fuel fill up logs you recorded that show you getting better gas mileage with a CRV compared to a Fit? I’ve owned both, and I know driving style affects it… my ex got 20mpg average while I got closer to 24mpg with the CRV. With the Fit, I get 33mpg.

I’m 27 years old and I have never owned a car, ever. I live in Seattle, so I have good public transit.
I just took a $10,000 pay cut so I could take more classes towards my future masters degree, in a career I love, instead of in the dead end job I currently work in. I understand your situation.

I would say either live in the city and get rid of the job or realize you have to leave this city (especially SF!) if you want to maintain a lifestyle you currently have.

I live in the upper southeast U.S. (just outside of a city) and COL is very inexpensive and jobs are plentiful…I enjoy living here (much better than NJ where I used to live…no offense, Jerseyites!).

My latest advice:

After reading the city folks’ suggestions, I would have to agree that you should either sell the car or look to see if you have parents or a friend who could ‘house’ it for you and start it up every week or so (so no insurance costs).

If you already ‘own’ more than 75% of the car, I would lean more toward parking it somewhere and not using it. I know it’s no fun to sell a car that is useful and dependable, esp. if you were the only owner and know its usage history. And if you do end up buying another car you will have to pay taxes and tags again (which is 6% of KBB value where I live) and possibly incur a small loan. At least now you’re working on paying off a 0% interest to your parents.

SF is a very walkable and public-transit friendly city. Probably one of the top 5 in the country especially living in the city. I would sell the car. $110 in parking tickets is likely only 2 tickets/month, as someone who’s lived in a city, I’ve had those months, despite best intentions. Not having a car doesn’t necessarily limit working outside the city either. Transit to colleges is usually pretty good because students usually aren’t driving to campuses. Even if you found a new job at a college outside the city, my guess is you could make public transit work. Often the school’s have their own shuttles, etc between campuses.

sell it. you will save two costs that don’t bring you any joy: the consumer credit interests and car costs (insurance, gas, depreciation). in first place that will give you a larger saving capacity for a rainy day. then it is probably something that would help you to pay for additional training. once landed that, you will probably could get another car and probably better and with less sacrifice in case you still wanted/needed one.

I live in a “Northern” Canadian city (we consider it central, but the media keeps telling us we are “north” LOL), and I sold our car 7 years ago in January when the tempurature regularly hits -30.

I never regret it. We rent when we need one from the rental company at the bottom of our street (about 5 blocks away) and the bus comes between 4 and 12 times an hour (depending on the time of day) just across the street from us.

Like Jan@72 I enjoy giving people a shock when they find out that I am a well paid professional with my own business and I don’t own a car in this oil rich province.

Since you are looking into a different day job or another evening job, I’d keep the car until you know what’s what. It would suck to find the job you want just to realize you need a car to get there and have already sold yours. On the other hand, maybe you’ll find another job close to home and not need the car at all.

A few options:
Sell car, pay 1/2 to family, save some for emergency, some to debt and continue payments on rest at agreed upon lower amount. Also, start a savings plan to purchase another (not new) car. Pay back to family is most important even if they say it’s not.
If you don’t have room or want a roommate(if the rental agreement allows), you could pet sit for extra money.
If you believe online schooling is a good thing, maybe you could exchange through a school. You could give your skills to their students and be payed by the skills of another teacher they employ for the extra education you want.
Could you tutor kids in their homes in the evening?
Business cards placed in your local area grocery stores? Poster in the park?
Have you inquired as to any other positions in the college you could do?

Sell your new car, purchase a reliable used car for under $2500, such as a Honda civic or accord, and pay off your consumer debt with the remainder cash from the sale of your new car.
This strategy will result in a very little monthly insurance bill since you can carry only liability. You also will sleep better knowing that your older car has a less likely probability of being stolen.
There are bargains out there for older used cars right now. Buy privately owned and have it inspected. This is what I do. I drive a 1987 Accord with 225,000 miles on it and love how much money I keep every month because of it!

Well looks like Martina has some fiscal prudence since she is weighing her options and asking readers on this blog. My suggestion would be to sell the car and use part of the money on the course she wants to do (investing in oneself is the right thing to do), part of the money for emergency funds and the rest as savings to be used towards a used car in the future if required. Get a roommate or move to a more affordable place in the same location to save on rent. I suspect the reason she enjoys her cuurent living arrangement has more to do with location than exactly the apartment she is living at.

I live in the Bay area so I know how expensive it is, and how hard it is to get in and out of the city on public transportation. The one thing I would look into is whether, given all the recent economic chaos, rent has dropped in your neighborhood. You might be able to negotiate a rate cut or move to a cheaper/better apartment without moving very far at all, freeing up some cash every month. Since you love your neighborhood, I’m definitely not suggesting you leave. Just be sure you’re paying the right price to live there.

My brother lived in the city for several years without a car. He used Zipcar when he needed a car for a day and found it much cheaper than owning. Would this be an option for you if you only have to commute a few times a week, or only need to drive to an occasional job interview?

Option 4. Talk to a Bankruptcy Attorney to educate yourself about whether it makes sense to file Chapter 7 to wipe out the $ 30, 000 of consumer debt. You have no savings and huge debt. You are essentially bankruptcy or close to it. If you do see one, make sure you tell them about the paying money to friends and family and ask if their would be any consequences of that.

If that isn’t something you’d consider, I’d sell the car. I, however, wouldn’t’ use the money from the sale to pay off credit card companies. You need a safety net in case your income is further reduced. Call a company like Greenpath to see if they can negotiate lower payments. Don’t fall for the advertising on TV from companies claim they can settle the debt. If you have to pay money up front it isn’t valid.

Sell the car. We live close to work here in Tucson, and we sold our second car and bought a 200cc scooter for commuting. Since the weather is usually nice, it was a great purchase for us, PLUS it gets 70mpg and the insurance on it is around $10/month. If you find you need more transportation than streetcars/buses/zipcars/etc can provide, there are other options out there, and cars are a HUGE drain, even cost-effective cars like the Honda Fit.

As for the lifestyle recommendations, take all these comments with a grain of salt. It’s easy to say, “Move! Sell everything! Leave California!” but it’s your life. I, too, was a single woman living alone for a long time (I only owned a motorcycle, incidentally) and where you live is a LOT more important than it is for couples or for men. I mean, sure, keep an eye out for that elusive cheaper apartment in your neighborhood — why not? — but if this is the life you want, then do what you need to make it happen.

Also, kudos to you for taking the office job for greater security. You definitely made a smart choice there! Teaching jobs are hard to come by, but posting a few flyers here and there advertising tutoring wouldn’t be a bad idea either, if teaching is what you love.

Lastly, make your own choices! Live your own life! Too often women feel pressured to live or act a certain way, and it’s important for YOU to decide what’s valuable in your life, and to act accordingly. So take my advice with a grain of salt too — only you know what works for you.

Usually I’d be all about selling the car, cars are money pits in general and in cities they’re even worse.

But since you still might be looking for a second job, it would make sense to keep the car for a while (if you can find a cheaper place to park it – got any friends in the far suburbs who would rent you garage space cheap so you can put it on storage insurance & avoid tickets?). In a month or two you’ll have a better idea what you’re doing.

Not even sure why this is a question. Sell the car. ASAP. You’re living on the edge. You’re in debt. The car is not a need, and it’s a depreciating asset. And it’s only a CAR, which you can buy again any day of the week in the future when/if you need one. And next time, you can hopefully buy a reliable used car for a few thousand dollars in CASH (ie, a Honda Civic).

Also, the Bay Area has all sorts of other options: Zip Car, regular car rentals, amazing public transit, etc. No need to own a car yourself for the occasional urgent need, as a few commentors have suggested.

I’m really surprised at all of the non SF people posting and making poor assumptions about what her options are. As someone who actually lives in SF, lets go through her situation and options.

1) Martina works in a poor paying but steady office job and pays roughly half her income for rent. In SF this means that she’s likely making roughly $30-35k, taking home about $2,200 a month and paying roughly $1,200 in rent. This means that she’s already living in a studio, has roommates or lives in a VERY cheap 1BR (ave 1BR rents are about $1500) so while changing her living situation sounds like a good idea at first, she probably won’t be able to save much if any money.

2) I know what neighborhood she lives in but out of respect for her privacy I won’t say, but there are only 15 or so zipcars that are even remotely close to her. She might be lucky though and only live a few blocks from one of the parking centers but it likely would take a bus ride just to get to her zipcar, assuming one of the 15 were available. With that said, the combination of muni, zipcar and biking should be able to fill all of her transportation needs. After living in SF for a few years I reached the conclusion that I could live without a car and save roughly $400 a month so I did a trial run for a month with zipcar and soon after sold my car. I haven’t regretted it and am happily saving that $400 (and most definitely don’t miss the hassle of owning a car in this city.

So what do I recommend? First, I agree with Erica 100%, she should be looking at ways to increase her income. There is only so much cost cutting you can do in this city before you realize you either have to make more or move away. This might mean changing jobs, taking a second job, freelancing or maybe increasing her training/education which would allow her to increase her earning power in the future. Earning $35k a year is nothing in SF – even double that won’t get you very far. I think we all need to get over the puritanical notion that making money is somehow bad and that working for a low income is somehow more self-rightous.

Her car decision all comes down to the assumptions that she makes about her future job(s). If in the next year, she thinks she’ll be using the car regularly – at least six times a month then it makes since to keep the car, if not sell it. If in a year or two she needs a car again she can buy a used fit for what she sold this one for and be better off by saving the monthly costs. $400 a month adds up fast. If you do keep the car, look at esurance as a way to save money, they are huge in SF and I was paying $50 a month to them when I still had a car.

As another option would it be possible to park the car with your parents and take it off the road? You would still lose money via depreciation but the cash outflows would stop and you could delay the decision to sell for a while.

We lived in San Francisco (Glen Park/the Excelsior) from 2005 – 2007 without a car. Public transportation is great. And there are local rental deals that are very cheap – we rented from a local Enterprise for $15/day on weekends! great for if you want to get out of the city. With all the street cleaning it is so hard to avoid paying parking tickets – a car is almost more of a hindrance than a help in SF!

Sell the car and see if your office offers “commuter check” or the equivalent, you can get a monthly muni pass /BART cards with pre-tax dollars.

Sell the car. It is too new and too expensive–why didn’t you buy an older (2-3k) beater with cash? Insurance, Parking, maintenance, loan, gas, and depreciation is costing you about $5k+ a year. So, look at it as a $400-$500 a month savings? Does that get you anything? In the future try to cashflow your purchases and never take a loan from family!

If you have a 2 bedroom apt, get that roommate as people suggest. That will save a lot of money too–if that can be done the extra $500 from roommate should be able to offset the car cost and you can keep the car.

I’m suprised at the number of responses that suggest keeping the car. Owning a car you OWE on while having 30K in other debt violates the first rule of holes- the way to get out of a hole is to stop digging! Martina says she pays ~200 a month on the car plus insurance of 125. Selling the Fit instantly frees up over $300/month at minimum that can be put to use on a debt snowball or building an emergency fund or both. Selling the car should be a no brainer.

Thanks to everyone for your input — lots of ideas. I am feeling more confident about going into private tutoring and consulting on the side *and* more confident about going car-free.

#68 (Nancy L.) and #91 (Missy): thank you. While I am working toward becoming financially sound, I like to live by design and not by default. I’m currently in a studio at market rate and have never been happier in my life after having lived with roommates for many years. This is the right choice for me. And while teaching + doing the day job, the rent is much less than 55% of my total income.

I agree with a million others who say sell the car. And if we lived closer together, I might buy it off you. I’d love a Honda Fit :)

I’d also be wary of spending too much money on education to be a teacher (if you’re looking for public school K-12 teaching). Salaries are not great, and right now with all the cutting, there are more teachers than positions. Check into your urban schools – many of them have alternate route programs that allow you to teach and get certified at the same time, or take a few-week intensive class in the summer and teach in the fall.

Re: tutoring. In my experience it often dries up in the summer, unless you can get hooked up with prep programs for people who need to pass a summer algebra/English/Spanish etc. class before going to a Cal-state in the Fall. Keep that in mind as you budget.

Also with tutoring, put up advertisements at the bulletin boards in the departments of community colleges/colleges of your subject area ASAP. Sometimes college students will hire a tutor as a group to help them prep for midterms and final exams (both of which are coming up soon!)

With K-12 tutoring, it’s usually found by word of mouth. If you can do a great job with one person, often you’ll have a ton of other folks clamoring for your services, but that snowball can take a while to get rolling.

Also figure out payment penalties in advance for if the person flakes and doesn’t show. It sucks to rearrange your schedule, show up some place, and then not get paid.

I’m curious about West-coast adjunct teaching jobs and what kind of commute is required. As I understand it, while San Francisco has a great transit system, outside the city transit is/was spotty for most of California?

Here on the East coast, you’re really limiting yourself if you have to rely on public transportation to get to community college teaching gigs– it certainly means you can’t take gigs at more than one college at a time, unless one or both are online.

Having known several people in travel-dependent fields whose ownership of “beaters” ended up costing them jobs when those beaters ate up their money and their off time, I’m curious about the recommendation to buy a beater if she gets a decent job. My experience is that you have to have money in savings in order to survive as a single woman driving a beater– or have reliable public transit. But perhaps the Zipcar would solve that problem.

#105 (Jenne): That’s exactly how I ended up going for the new car — I had been through too many beaters. In California, community college adjuncts often call themselves “freeway flyers” because we’re always in the car going from one college to the next, sometimes quite a haul.

Less car time and more security was another factor in balancing out the teaching with a 9-5. My thinking is that it would make life more livable as I hunt down the elusive full-time instructor gig at my local community college.

I have been trying to go car free for over a year but I am only down to a reduced amount of vehicle usage. Being car-free would be a dream — get a decent bike for transit.

If you need a car after you sell the Fit then just rent one if it is short term. But figure the thing costs $200/month-ish just to own would have me questioning it. And also paying off debt and no longer having those minimum payments would also clean up cash flow.

Furthermore, you will need less EF for this. How many “emergencies” are car-related? If you don’t have the car, you won’t have the ’emergencies’ Also figuring the cost of gas and maintenance on top of this I’d drop it.

But before I sold it I would send some resumes out to see if you have a use for it because you might find a new job. Then MAYBE I’d consider keeping it.

A penny saved is a penny earned. So you won’t have the expenses. 20 hours a week at minimum wage is around $475 take home. If you sell the car, you’ll be in the ballpark (factoring 2% min payment on the credit cards at $10000).

I rent in the bay area and lived nearly a decade in your neighborhood. I’m sorry; I sympathize, but between #2 and #3, I’d say give up the apartment. The high cost of housing will just continue to be a drag on your finances. I know it’s daunting, but yes, you can find a compatible roommate. It’s just reality in SF that people have roommates through their 30s (or live with SO’s) and so there are plenty of decent, respectful people with whom to share. There’s no reason to think you can’t find another living situation with all the same amenities.

Selling the car seems like a quick fix, but, in my opinion, will cost you more in the long run. I am very happy that I kept my inexpensive, cheap to run car even during all those years that I only put 3000 miles/yr on it. (It’s now 16 years old, low mileage, still runs great.) Every person I know who went without a car in that neighborhood, insisting it wasn’t needed, completely reversed their opinion once they bought one.

Good luck and remember that rental prices have come down in the last year so that some people will be looking for roommates in apartments for which they are overpaying.

I understand her predicament since I live in Alameda, which is just across the Bay. I moved to the Bay Area five years ago and chose not to live in SanFran because of the high rent. I sugeest moving to a cheaper place (in Alameda I pay $1075 for a single bedroom with covered parking, part utilities paid for, and a 15’x15′ fenced patio). Sell your car and buy a bike. SanFran has very bike friendly mass transit so getting to anywhere in the city is pretty easy plus you get exercise. I would seriously look outside of SanFran for a better apartment or follow the suggestions of several readers above about getting a roommate.

SELL THE CAR! I’ve lived in Chicago for 10 years without a car. I take either the L or bus to work everyday. And when I need one a car, I either rent one or get a zipcar (which I’ve been a member of for about 5 years). The savings in no car payment, insurance, city sticker, gas, maintenance, tickets, etc has been huge and I wouldn’t have been able to afford my life here if I had kept a car. Free up your money and budget a small amount each month for car expenses and then if you don’t use it all, throw it toward debt or savings.

sounds to me like the highest priority is finding a second job! it sounds like your situation was workable when you had both the teaching and the secretarial work. $10,000 will not be that useful to you if you still have to pay back your loan to your parents and if your living expenses are too high. selling the car might be part of a solution, but i don’t think it is the most important factor – it might be enough to stop driving it for a while, as some have suggested.

i would make several different budgets for different scenarios – i.e. if you make x amount with a second job, how soon can you pay off your debt; or can you afford the course that you want to take; or would selling the car allow you to “refinance” in a significant way by paying off the credit card debt.

i would take a long view and try to sketch out a couple of likely financial scenarios over the next two or three years. it will probably be apparent whether the cash from selling the car will make a significant difference to you.

I agree with JD – you are in SF, join Zipcar! It’s very convenient. Supplement it with a bike – workout and commute at the same time :)

However – my boyfriend has a similar situation as you – I would say he drives around 6 times a year from Boston to PA. The rest of the time he just takes the T and walk everywhere. We have off street parking so that is not a problem. I told him a few years back to get rid of the car but he was too attached. He ended up going back for grad school and the school is 1.5 hrs away. So now the car is becoming useful. My point is if you are seriously considering going back to school, and it’s not within the city, then you should probably keep the car.

I think until she has a new job she should not sell the car. Her new job hunt is going to be difficult with this economy and having a car widens her options. So work the job to increase the income as much as she possibly can and then if her job is 100% WALKABLE,,well then consider losing the car but not until she has the new job lined up.

If I were Martina and determined to teach college courses for minimal pay, I would look for adjunct work or adjunct-like work in the form of online courses at out-of-town or out-of-state institutions, and at proprietary schools such as the University of Phoenix. The UofP hires people to teach fairly Mickey-Mouse courses through the school’s own course software, which they will train you to use. Pay on the face of it is less than a community college’s, but the courses are so much shorter and the workload so much lighter that the per-hour rate works out about the same.

If Martina has a master’s or a Ph.D. in a subject that colleges teach and she can use a computer, she should be able to work remotely for colleges in states that are not as hard-hit as California.

However, as other readers have pointed out, adjunct teaching and low-paid day jobs won’t cut it in San Francisco. Adjunct work is nothing more nor less than slave labor, especially if you’re teaching writing-intensive courses. If she’s going to get a second job, she should look for work that’s less exploitive. Working at Walmart would fit that description.

In any event, whether the second income stream is from adjunct teaching or some other low-paid enterprise, she should get rid of the car whether or not she has two jobs. In San Francisco, you don’t really need a car, but you do need an income of around $50,000 to $60,000 to maintain what would be regarded as a lower-middle-class lifestyle in most other parts of the country. If she can’t swing that, then she’s looking at paring back the amenities to a bare minimum. For what she’s paying on the car and for parking, gas, and maintenance, she could rent a car on the rare occasion when she needs one.

I would say sell the car. Living in walking distance of the steady job and being in a city with good public transportation options tip the scale in favor of selling the car, in my opinion. Then what to do with the proceeds from the sale? I would probably pay down as much of the credit card bill as possible and try to pay off the loan with the parents.

Cars are money pits, yes indeed.

To make some extra cash, would it be possible to try to pick up some overtime work at the steady job? OT would likely pay better than a part time job after work, plus she’d already be there physically so no need to pay for transportation to get to work.

How much do you use the car? That’s the first question. If you are looking for a second job, and find one that is not within walking distance, you will need the car. If you find a job that is within walking distance, then you probably won’t need the car. My opinion is keep the car until you find that second job.

I’d say sell the car and get a Zipcar membership for when you need something besides transit. I’ve been carfree in Portland for over a year now and I’ve found it easy enough with the Zipcar membership to fill in the gaps.

I would also say look at your hobbies and assets for other things you can sell or market on the side. You probably won’t make much at first but it would give you another source of income. Sites like Etsy.com can help with hobbies and Ye Ol Ebay can help with just plain selling your stuff.

I would recommend a new housing situation soon or another job simply because you’re riding pretty close to the wire where you’re at right now but I understand that living situations are not as malleable as other areas, particularly if you factor in the cost of moving, and the job market is nasty right now.

Absolutely sell the car! it will alleviate a financial burden and it will alleviate stress (no more tickets). I lived in Philadelphia for most of my life, and never needed a car, that’s the advantage of a big city.

I wouldnt sell the car just yet. It’s great that you have a pedestrian neighborhood and lifestyle but without a car your job prospects will be more limited.

I would focus on getting another job or a second job 1st and hold on to the car in case you need it to commute to a new job opportunity.

Get your income to a comfortable place and then decide about the car. Of course, as others mentioned you may want to sell the car and buy something less expensive. Again, I’d make that decision after the job/income situation is known.

Sell the car! The apartment is also a much larger percentage of take home pay than it should be, but one justification for it is that it’s close to everything. She’s basically paying for convenient transportation twice by having the well located apartment AND keeping the car. I would definitely eliminate one of those costs, and it sounds like the car is more easy to let go of.

I agree with #9, #23, and a whole host of others which think you should do all three. Sell the car, find a roomate, and get a part time job.

30% rent, 20% savings, 15% long term expenses, 20% monthly expenses, 5% emergency fund, 10% investment. That has been my magic recipe for awhile now and it has been working really well. If you followed this with your main job and used your part time job for only paying down your debt, you will so much happier within a year.

I live in the NYC area as well so I know it can work in expensive areas. Of course I don’t go out much, but as you said there a lots of almost free things to do in a city.

Martina’s 2nd job? As the registrar at a community college in NC, I know that CC are looking for faculty who can teach on-line. We employ people from all over the world. Has Martina searched for on-line teaching positions at CCs?

Should Martina sell the car? I would encourage this if she has an alternate means of transportation….

Going and buying a beater is a bad idea. You will have to put in a significant amount of money just in repairs. Keep the car if you plan on moving anywhere else that doesn’t have a great public transit system. Also getting a new car or even a new used car is a pain. Plus with all that debt it makes it that much harder to buy one. I don’t live in the bay area so I can’t comment on the rent situation but if the rent is swallowing a good portion of your income and you’ve cut costs to the bone you might have to get a cheaper place or leave to a city where you can teach and still have some money left over. Just my lengthy 2 cents.

My initial response was to get rid of the apartment — 55% of your take-home pay is too much (even for the Bay Area which is where I live). But because you love your home, you must be willing to stay in on most evenings and make huge sacrifices to your Wants budget: no pricey vacations or day trips, no big-ticket items (nice clothing), no extra food items (limited to Two-Buck Chuck).

Also, you’ll be improving your income so the percentages won’t always be this off.

If you are really set on staying put in SF, sell the car, but hang onto the cash. You have a lot of uncertainly going on at the moment, and while it might feel great to offload it immediately onto debt, you just lost a job and need to hang on to it in case things get crazy in the next couple of weeks as leverage. You might decide you actually really do need a car, which means you will have to go out and buy a $500-1000 beater.

Once the situation stabilizes and you master a life without a car, take the money out of the savings account and pay off some debt.

Sell the car. Definitely. Not only will you be able to pay off the rest of your debt, but the payments you make now on your debt, car insurance, etc. will go a long way toward increasing your emergency fund.

No-brainer. It seems like a tough choice, but it’s not. I’m a huge car enthusiast, I love to drive, but I went without a car for a year in San Francisco with no issues when finances were tight. In fact the first thing I did when I lost my job was to ditch the car, followed closely by ditching my expensive apartment.

I biked to work, or took the bus/BART. I rented a car once when I really needed to go somewhere. Eventually I picked up a motorcycle, then once I had a job that required a commute I bought another car.

And that was before Zipcar. $10k will pay for years of Zipcar membership.

Don’t forget you’re not only paying $125 a month or $1500 a year for insurance, you’re probably paying $1000 a year in ticket, and losing about $1000 a year in depreciation.

That’s $3500 a year! And this is all assuming you own the car outright, and doesn’t include maintenance and your time spent dealing with it.

Sell it.

And once you’ve sold it I would seriously consider finding cheaper digs. 55% of your income on rent? Wow.

I like where #4 is going. Chances are, your college wants to retain experienced teachers like yourself. See if you could use this as leverage to get employment in the summer/fall – e.g., a computer science prof working hourly at the computer help desk or an english lit prof taking a shift at the writing lab.

I’m with everyone who said that you should reexamine your “non-negotiable” apartment. 55% is very high…consider some alternatives now just in case the worst-case scenario develops.

My suggestion is to see if she can get a reduced insurance rate (low milage) or store the car and remove the insurance until she starts driving it again (if possible). I think that if she gets a better job or decides to go to school, she may need the car and it would be better to have it already than have to buy something after her savings are sapped.

I’m with all of the other readers wondering about how much is owed on the car and how it was financed. If someone is paying a loan on that car and it’s upside down, there’s a big problem. Plus, that loan needs to be repaid before you go and pay anything else.

I’m also with the team “non-negotiable is a no no” team. Sorry hon but in your situation EVERYTHING is negotiable and you need to really get a grip on expenses. That place has got to go OR you need to manage a roommate. With a better economic picture comes a better opportunity for a better place.

What about having a discussion with your employers at your low paying but steady job? Is it possible to take on more responsibility now that it has become your primary job? Is it possible to therefore earn a bit more money?

What are you teaching? Is this something that you can actually do on the side to earn money? For example, if you’re teaching photography, can you start taking wedding photos? Or if you’re teaching accounting, can you take on some bookkeeping tasks?

If you have a neighborhood that you love, try asking around for part time work. If you know the owners of various small businesses, they may have some cash work for you to do that might help you with your savings.

What about the building in which you live? Can you take on some maintanence tasks in exchange for either a rent discount, or offstreet parking? My husband & I lived in a neighborhood that was heavily ticketed, and our ‘job’ net us money off our rent, and parking that kept us from accruing tickets.

If you decide to keep the car, maybe consider getting a second job that uses said car. Work as a courier, or a pizza delivery person? The pizza delivery part is good b/c you’ll walk home with cash after every shift. This means you’ll have the psychological benefit of putting cash into savings or into paying off your consumer debt DAILY or weekly.

I live in SF; definitely get rid of the car, at the very least. I lived here for ten years without a car, and it never caused me any problems.

Also, if I only had $500 in savings and owed $30,000 in consumer debt, I’d be looking for a cheaper place to live. This is a good time right now; many people are leaving the city because of the job market and the high rents. As a result, rents are going down. Unless she’s had her current apartment for a long time, and she has rent control, she could probably find a better deal.

As for getting a higher-paying job–good luck. About 1/2 of my highly educated, youthful but experienced, hardworking friends are currently out of work or underemployed. It’s a buyer’s market right now for labor. The third biggest employer in SF has frozen hiring for the next two years.

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